Re-stimulating Health Care Competition CalPERS Board of - PowerPoint PPT Presentation

Re-stimulating Health Care Competition Re-stimulating Health Care Competition CalPERS Board of Administration Offsite Meeting January 23, 2019 Board of Administration Offsite 1 January 2019

Re-stimulating Health Care Competition Agenda • Managed Competition - Alain Enthoven, Ph.D., The Marriner S. Eccles Professor of Public and Private Management Emeritus, Stanford University • Re-stimulating Competition: What We Believe, Observe, Fear, and Can Do - James C. Robinson, Ph.D., MPH, Berkeley Center for Health Technology, University of California, Berkeley • The Critical Role of Physicians - Kelly Robison, CEO, Brown and Toland • The Quest for Value - Barry Arbuckle, Ph.D., President & CEO, MemorialCare Health System Board of Administration Offsite 2 January 2019

Re-stimulating Health Care Competition Kathy Donneson, Chief Health Plan Administration Division CalPERS Moderator Board of Administration Offsite 3 January 2019

Re-stimulating Health Care Competition CalPERS Plans Association Plans: CCPOA CAHP PORAC Board of Administration Offsite 4 January 2019

Re-stimulating Health Care Competition Board of Administration Offsite 5 January 2019

Re-stimulating Health Care Competition Heat Map of HMO Health Plan Options for 2019 Legend: 1 2 3 4 5 6 PPO Resources: California HMO Plan Count by Zip Code Board of Administration Offsite 6 January 2019

Re-stimulating Health Care Competition Intersecting Viewpoints and Evidence CalPERS Market Competition Health Plan Competition Provider Competition Payment Models What is Ideal? Board of Administration Offsite 7 January 2019

Re-stimulating Health Care Competition Panelists Barry Arbuckle Alain Enthoven Kelly Robison James Robinson CEO CEO PhD PhD, MPH MemorialCare Brown & Toland Stanford University UC Berkeley Health System Board of Administration Offsite 8 January 2019

Re-stimulating Health Care Competition Alain Enthoven Board of Administration Offsite 9 January 2019

Managed Competition Alain Enthoven, Ph.D., The Marriner S. Eccles Professor of Public and Private Management, Emeritus, Stanford University 10

Re-stimulating Health Care Competition Managed Competition • CalPERS and Covered CA are best examples • Market must be managed by principles • Why competition? • Systems improve quality and economy • Delivery system HMOs vs. Carrier HMOs Board of Administration Offsite 11 January 2019

Re-stimulating Health Care Competition James Robinson Board of Administration Offsite 12 January 2019

Re-Stimulating Competition: What We Believe, Observe, Fear, and Can Do James Robinson Leonard D. Schaeffer Professor of Health Economics Director, Berkeley Center for Health Technology University of California, Berkeley January 23, 2019 13

Re-stimulating Health Care Competition We act on our beliefs and on what we observe We long have believed in market incentives to improve the efficiency and quality of health care. But the market has evolved in ways not always consistent with those beliefs. We are bewildered. We cannot keep doing what we have been doing, or will keep getting the same results. The market is changing. Our strategy must evolve with it. 14

Re-stimulating Health Care Competition Our beliefs • Managed care: Integrated provider networks deliver cheaper and better care than broad choice networks. HMOs are superior to PPOs. • Provider organization: The ‘cottage industry’ is inefficient. Physicians, hospitals, and other providers should integrate and coordinate. • Payment: FFS rewards volume over value, and imposes a 100% tax on provider cost reductions. Solution is global capitation. 15

Re-stimulating Health Care Competition We observe consolidation and leverage • Managed care: HMOs are losing commercial share to PPOs, with exception of Kaiser. Private employers shifting to high-deductible plans. • Provider organization: Many integrated providers are using market share to raise prices and channel patients from low to high priced sites. • Payment: ACOs and shared savings contracts are spreading, but slowly, and with only modest cost savings to date for purchasers. 16

Re-stimulating Health Care Competition We are bewildered • Managed care: What should purchasers and public policy do: – Health plan mergers? – Small provider-sponsored health plans? • Provider organization: Should policy fight physician and hospital consolidation, via anti-trust and regulation? • Payment: Is capitation strengthening dominant providers, who then raise prices? What is the right model? 17

Re-stimulating Health Care Competition Geographic markets differ • Southern California: Very large and competitive, with relatively low prices. Trend towards consolidation. Worrisome. • Bay Area & Sacramento: Very consolidated, high prices. Worrisome. • Rural areas: Inadequate provider supply, and many local monopolies. Worrisome. 18

Re-stimulating Health Care Competition What is to be done? Managed care • How many health plans? • How much variety, in types of health plans? • Collaborate with other public purchasers? 19

Re-stimulating Health Care Competition What is to be done? Provider payment • Blended payment: Most providers still receive FFS; how can it be made value-based? • Capitation: Payment should shift towards more capitation if and when providers develop financial and clinical capabilities. 20

Re-stimulating Health Care Competition What is to be done? Benefit design • Basic principle Consumers should face financial responsibility for products and services where they have meaningful choice. Their choices must be supported by purchasers (offer low-priced option, eliminate low-value options, mandate transparency on price & quality). • Reference pricing • Defined contribution 21

Re-stimulating Health Care Competition Kelly Robison Board of Administration Offsite 22 January 2019

Re-Stimulating Health Care Competition: The Critical Role of Physicians Kelly Robison Chief Executive Officer Brown & Toland Physicians January 23, 2019 23

Re-stimulating Health Care Competition Market Trends The Race to Value Based Care • Health systems are expanding regional networks • PWC projects 2019’s medical cost trend to be in excess of 6 percent • Push for lower cost is increasing ACOs, and payment models are putting more pressure on providers to assume risk • Innovation is driving change in care delivery • Shift to value based care Hospital system landscape *Based on inpatient discharges.

Re-stimulating Health Care Competition The Changing Physician Landscape Market Drivers Market Payment Administrative Interoperability Consolidation Reform Burdens Spectrum of Communication and Physician Relations; New practice payment models; care coordination; extension of office Driver models reduce CAP, FFS, ACOs, providers and staff; help with financial burden payers billing, claims, more Shared Savings Growth through Protective Practice support and strategic language EHR, Reporting, education; coding, Brown & Toland partnerships and minimizes Coding guidelines, Solution succession planning expansion physician risk

Re-stimulating Health Care Competition Supporting the Evolution of the Physician Practice As the healthcare industry continues to evolve, physicians need a partner that is leading the way in business solutions for private practice physicians. New technology, a complex reimbursement environment, and the quest for delivering affordable high quality care are just a few of the challenges that independent physicians face today. We believe our physicians should have ample time, energy and bandwidth to care for their patients. Through new practice models and our foundational services, we aim to restore a sense of balance for doctors by managing the most stressful and onerous aspects of running a practice. Our goal is to become the “go-to” group for physicians and patients. Independent Hybrid Employed

Re-stimulating Health Care Competition Market Competition The Commercial health plan partners have remained the same; however, they are offering more innovative benefits and products offerings. Narrow There is a focus on smaller, full-service networks who can deliver high quality care while reducing the total cost of Networks care. High Deductible products and HSA/HRA products have emerged, New Products which encourage patient responsibility for their healthcare choices; i.e. ER versus Urgent Care, Hospital versus ASC. These systems promote care coordination along the continuum of Integrated Health services to reduce duplication of services and ensure the right Systems care is delivered at the right time by the right provider.